Russia

An old-fashioned, modern look

Strong, elected local leaders are shaping the fortunes of Russia’s regions. Novgorod, in the north-west, offers a promising model for local government. Rebellious Primorsky Krai, in the far east, embodies the worst

NO MATTER that 500 years have passed since the Hanseatic League's presence in Novgorod was suppressed by Ivan III, prince of Moscow. Residents of the city still refer to the east bank of the Volkhov river, where the merchants gathered, as the “trade side” of town. They speak, too, of “Novgorod the Great”, when they want to distinguish their city from the upstart Nizhny Novgorod (“Lower Newtown”) 800 kilometres (500 miles) to the south-east—though, with a population of 1.2m, the newer place has grown to six times the size of its venerable namesake.

Such tenacity is understandable. Together with Kiev, the city-state of Novgorod gave birth to Russian culture in the 10th and 11th centuries. It was a great trading centre when Moscow was a muddy village. Resisting the 12th-century Mongol invasions, it preserved a system of municipal democracy unique in Russia. Its fall to Ivan in 1470 marked the triumph of Muscovite totalitarianism. Novgorod “stood for the road not taken in Russian history”, according to Nicolai Petro, an American scholar at Novgorod State University.

But after a detour of several centuries, Russia is coming back Novgorod's way. The Novgorod region, and Novgorod city, are starting to boom again. A recent World Bank survey ranked the local investment climate one of the six best in Russia. Investors have not waited to be told. Novgorod region, with its 750,000 people, attracted $166m in foreign direct investment last year, the highest rate per person in Russia. Half its industrial output comes from firms wholly or partly owned by foreigners; for Russia as a whole the proportion is 2.5%. The latest and biggest vote of foreign confidence has come from Cadbury Schweppes, a British food firm, which in November opened a $120m chocolate factory in Chudovo, north of Novgorod city.

Other local governments are starting to talk about a “Novgorod model”, the main features of which are a highly devolved system of local government, and tax holidays for foreign investors. In May, the American government said Novgorod would be a main beneficiary of its Russian aid, now being redesigned to focus on a few promising regions. James Morningstar, an adviser to Bill Clinton, told a Senate committee that Novgorod offers “one of the most compelling illustrations of Russia's promise to become a prospering market economy”.

It might seem fanciful to argue for much real continuity between Novgorod's medieval traditions and its modern resurgence. But Mr Petro reckons it is clear that “the ideal of Novgorod as a cradle of Russian democracy serves as a more or less conscious rallying-point for many regional administrators.” History underpins a regained sense of regional pride and identity. Novgorod city has retained a handsomeness and a concentration of monuments denied most other regional capitals—a factor by no means negligible in its appeal to investors. It also has the only five-star hotel in Russia outside Moscow and St Petersburg, put there in a fit of premature optimism by an Austrian chain, Marco Polo, and later turned over to local management. Unlike its parvenu neighbour, St Petersburg, Novgorod city is of manageable size, and tightly run. Signs of good government abound. The streets are, for Russia, astonishingly clean. The grass is cut. The city has invested in new German buses. Small wonder that its mayor, Alexander Korsunov, was re-elected last year with almost 80% of the vote.

But the main author of Novgorod's revival has been its regional governor, Mikhail Prusak, 37, the youngest governor in Russia when first appointed by Boris Yeltsin in 1991. After four years he was returned for a second term by direct election. Mr Prusak cloaks his go-ahead convictions in a conservative exterior. He is admired by the radical reformers who have taken over the running of Russia's government. He also gets on well with Viktor Chernomyrdin, Russia's middle-of-the-road prime minister. At home in Novgorod Mr Prusak has managed to stay on good terms with local Communists and Agrarians, helped by his previous experience as a manager of a state farm. Rather than trying to break up the old bureaucratic power structures inherited from the Soviet era, he has by-passed them by encouraging the formation of new democratic institutions at district and village levels.

Mr Prusak insists politely that no Novgorod model should be imposed across Russia. Each region should follow the course that suits it best, he says. But Novgorod's place in Russian history, and Russia's search for a post-communist identity, do give the notion of a Novgorod model a special potency. It would answer to Russia's desperate need to root reform and democracy in its own traditions, rather than those of the West. It would have elements pleasing to liberals and nationalists alike. And it would remind other regions that democracy, liberalism and prosperity tend to go hand in hand. That would be an especially useful service as the devolution of power in Russia gives local bosses more and more freedom to rule as well, or as badly, or as barmily, as they wish.